5 Pounds – Gibraltar

In 1988, Gibraltar's currency situation was characterised by a practical and legally complex dual circulation system, underpinned by its unique political status as a British Overseas Territory. The legal tender was the Gibraltar pound (GIP), issued by the Government of Gibraltar and pegged at par with the British pound sterling (GBP). While Gibraltar issued its own banknotes and coins, sterling circulated freely and interchangeably within the territory, forming the bedrock of the monetary system. This arrangement reflected Gibraltar's deep economic and constitutional ties to the United Kingdom.

However, the Spanish peseta also played a significant, albeit unofficial, role in daily transactions due to Gibraltar's geographical and economic proximity to Spain. Cross-border trade, tourism, and a substantial number of Spanish frontier workers meant the peseta was widely accepted, especially in retail and service sectors. This de facto dual currency environment with the peseta was market-driven and operated without any formal treaty or agreement, highlighting the integrated, yet sometimes tense, economic relationship across the border.

The period was one of relative stability for the Gibraltar pound itself, but it existed within a broader context of political friction. Spain's continued claim to sovereignty and its restrictions at the border influenced economic flows. Furthermore, as a member of the European Economic Community (EEC) alongside the UK and Spain, Gibraltar was part of the EEC's customs union but excluded from the Common Agricultural Policy and value-added tax (VAT) area. This hybrid status meant its currency arrangements, while stable domestically, were a microcosm of its larger political and economic negotiations.